Correlation Between Nasdaq and Dimensional Global

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Dimensional Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nasdaq and Dimensional Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Dimensional Global Core, you can compare the effects of market volatilities on Nasdaq and Dimensional Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nasdaq with a short position of Dimensional Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Dimensional Global.

Diversification Opportunities for Nasdaq and Dimensional Global

0.44

Correlation Coefficient

Nasdaq  Dimensional Global

Very weak diversification

The 3 months correlation between Nasdaq and Dimensional is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Dimensional Global Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Global Core and Nasdaq is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nasdaq Inc are associated (or correlated) with Dimensional Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Global Core has no effect on the direction of Nasdaq i.e., Nasdaq and Dimensional Global go up and down completely randomly.

Pair Corralation between Nasdaq and Dimensional Global

Given the investment horizon of 90 days Nasdaq is expected to generate 1.13 times less return on investment than Dimensional Global. In addition to that, Nasdaq is 1.77 times more volatile than Dimensional Global Core. It trades about 0.07 of its total potential returns per unit of risk. Dimensional Global Core is currently generating about 0.15 per unit of volatility. If you would invest  2,488  in Dimensional Global Core on December 5, 2024 and sell it today you would earn a total of  304.00  from holding Dimensional Global Core or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.4%
Values	Daily Returns

Nasdaq Inc  vs.  Dimensional Global Core

Nasdaq Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Dimensional Global Core

Risk-Adjusted Performance

Weak

Over the last 90 days Dimensional Global Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dimensional Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nasdaq and Dimensional Global

The main advantage of trading using opposite Nasdaq and Dimensional Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Dimensional Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dimensional Global will offset losses from the drop in Dimensional Global's long position.

The idea behind Nasdaq Inc and Dimensional Global Core pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.